Substantial rights under tax provisions should not be denied because of procedural non-compliance, emphasizing the need for leniency in minor delays.

ORDER :

C.SARAVANAN, J.

In this Writ Petition, the petitioner has challenged the impugned Order dated 29.12.2024 passed by the 1^st Respondent / Commissioner of Income Tax (Exemptions), whereby the petitioner’s application dated 25.03.2024 for condoning the delay in filing Form 10B under Section 12A(1)(b) along with the return of income under Section 139 (1) of the Income Tax Act, 1961, has been rejected.

2. The dispute pertains to the Assessment Year 2019-2020. The petitioner had filed the return of income on 25.07.2019, much prior to the last date prescribed for filing of the return, i.e., 30.09.2019. However, under Section 12A(1)(b) as it stood during the relevant period, the petitioner was also required to file an audit report in Form 10B along with the Return of Income. It was however not filed by the petitioner within a prescribed time.

3. During the material period, Section 12A(1)(b) of the Income Tax Act, 1961 read as under:

“12A(1) The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:-

(b) where the total income of the trust or institution as computed under this Act without giving effect to the provisions of section 11 and section 12 exceeds the maximum amount which is not chargeable to income-tax in any previous year, the accounts of the trust or institution for that year have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288 and the person in receipt of the income furnishes along with the return of income for the relevant assessment year the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed.”

4. The petitioner filed the Audit Report in Form 10B only on 13.01.2020 with a delay of 171 days. Subsequently, the petitioner’s return of income, filed on 25.07.2019, was processed, and an intimation under Section 143 (1) of the Act was sent to the petitioner on 09.06.2020. It appears that the petitioner’s bank account was also frozen on account of the aforesaid intimation under (1) dated 09.06.2020.

5. In this background, the petitioner filed an application on 27.03.2024 under Section 119 (2)(b) of the Income Tax Act, 1961, for condoning the delay in filing the audit report in Form 10B under Section 12A(1)(b) of the Act.

6. By the impugned order, the 1^st respondent rejected the application filed for condonation of delay, following the mandate of CBDT Circular No.2/2020, dated 03.01.2020, with the following observations:

“4.1 I have carefully examined the facts of the case and the submissions of the assessee. Further, the CBDT vide Circular No.2/2020, dated 03-01-2020 in para 5 & 6 has directed as under:

“it has also been decided by the CBDT that where there is delay of upto 365 days in filing Form No.10B for the AY 2018-19 or for any subsequent AYs, the Commissioners of Income Tax are hereby authorized to admit such belated applications of condonation of delay u/s 119(2) of the IT Act and decide on merits.

The Commissioner of Income Tax shall, while entertaining such belated applications in filing Form No.10B, satisfy themselves that the assessee was prevented by reasonable cause from filing such application within the stipulated time."

4.2 It is noticed that the assessee has filed return of Income u/s 139(1) of the Act on 25.07.2019 and Form No.10B on 13.01.2020